Banker pleads guilty to Libor fraud

[spring hall convert]

So the Tories are responsible for the light touch regulation at the time despite not being in power?

I am not a Tory apologist by a long chalk but a complicit opposition is not the same as a incompetent Govt........hence the flow of apologies on Labour's failures to control financial services from Balls and Miliband since 2010. Remember Labour created the FSA in 2000, it is their baby. They deliberately made it weak and created the environment for firms and banks to go for broke.

No one in Govt at the time cared about responsible mortgage lending, or provision of credit during the housing bubble, because growth was high and associated Govt taxes on bank dividends, profit and stamp duty was higher than ever.

Plenty of experts called the bubble........Brown announced he had abolished boom and bust.

He is not standing for election now, those who were advising him on policy are.........that's why it matters.

They didn't oppose it in opposition. Anyway, this isn't my arguement to have. Find someone that has half an interest in this meaningless left/right tennis. I'm not your man. They are as bad as each other, we need to wake up to this fact and start voting for something that actaully represents our interests.

 

[father_and_son]

Do you know in which direction libor rates were manipulated higher or lower?
Doesn't make it any less of a crime but if his intention was to keep the rate lower then it's possible that you aren't the victim that you are making out.

If it was kept high then it helped savers and hurt borrowers, visa versa if it was kept low (which I believe was the case, therefore its savers who should be up in arms).


The real damage is probably not in the actual financial impact on any individual (the consequences of the fraud to the overall economy would be impossible to unravel and to an individual, actually miniscule) but the real damage is to the faith in the system. Therefore, in my opinion, the greater culpability actually sits with the regulator.

Corrupt or corruptable people exist in every walk of life... when there are national and international consequences, the failure of the regulator to assume that somebody would have their hand in the till and apply reasonable precautions and checks is negligent in the extreme. My understanding is that traders were allowed to, effectively, just enter a number in a report to confirm the rate they were trading at. No one was checking and no system was in place to validate the number. It was all done on trust. How on earth is this regulating the market?

While any individual involved in falsifying the records should be prosecuted, I personally, don't think any should be "made an example of" with an extreme sentence - just one in line with normal guidelines. The example should be made by dismissing the team responsible for this market at the regulator for gross negligence, with all of them banned from the financial services market (just as the traders will be) as not fit and proper individuals.

 

[cunning fergus]

Didn't deregulation of the banks begin under Tories? So the Tories began deregulation, were for far lighter regulation than that enacted by Brown and so is it any wonder that tighter regulation didn't exist? Also, the perception is that the three elements of the Tripartite regulatory system didn't really communicate and that is where it failed, not because the FSA was weak (or, in fact, weaker than the other two parties). In the Libor scandal, the Bank of England doesn't come out smelling of roses but has still been given more power by Osborne. There were a lot of parties complicit in the failings, BofE, FSA, Treasury, the Opposition, the Banks but the culprits were the bankers that actually manipulated the rates.

No, I wouldn’t say that the tories started with "de-regulation", as regulation as we know it only started on the back on the 1986 FS Act which introduced the type of regulator we know today (it was LAUTRO, FIMBRA, SFA etc. back then); however these were largely bodies created by the industry and were therefore self-regulating providing an obvious conflict.

As FS became more available to the public from the late eighties onwards so the FS industry grew and then familiar scandals began to unfold:

http://www.theguardian.com/business/2011/feb/07/barlow-clowes-declared-closed-compensation

http://www.investopedia.com/ask/answers/08/nick-leeson-barings-bank.asp

http://www.theguardian.com/business/2012/may/17/files-close-bcci-banking-scandal

http://www.bbc.co.uk/news/business-10725923

http://www.bbc.co.uk/news/business-20858236

All of these scandals (and more) arose under the tory watch and should have been prevented had regulators been more intrusive and independent. The tories failed to regulate the City……………..shock horror.

When Labour swept to power in 1997 they vowed to resolve the prevailing regulatory position in light of these scandals, and thus they introduced the FCA, which was directly responsible to the Treasury.

This was fine (and correct in theory) however the same politicians then interfered and pressured the body into light touch regulation (all confirmed by the Treasury Select Report) a practice that was catastrophic given the scale of the banks’ balance sheets.

http://www.theguardian.com/business/2013/mar/24/farewell-fsa-bleak-legacy-light-touch-regulator

So, surely we are entitled to ask ourselves why on earth would these politician pursue a light touch policy when they knew of the scandals that had arisen previously because of poor regulation. The collapse of Barings in the 90s was the perfect precedent of the damage that could be wreaked on the economy, yet it was merely an hors d’eovre to the collapse of RBS, BBG, BOS and Northern Rock. In short labour learnt no lessons from tory incompetence.

The tragedy for the British taxpayer was that when the trouble arose in 2008 the damage was exponentially greater having been fuelled by the housing bubble, gleefully stoked by Gordon Brown.

The banks misconduct evidently played a significant part in this collapse of the banking system, and they should be duly dealt with and wrongdoers imprisoned for years for all I care………………but then the politicians who were as deeply involved should face the same reckoning. For their part they are just as guilty.

They should certainly not be standing as the prospective PM and/or Chancellor…………………frankly it’s an insult to the electorate that they are even MPs.

 

[beorhthelm]

Actually pretty much all loans (including mortgages) are linked to LIBOR indirectly. The banks that offer them to you borrow at LIBOR rates and then set rates to achieve their desired profit margin. That's why often you see mortgage rates go up when LIBOR starts moving up. They are often slower to drop them when rates fall however!

this describes the BoE base rate. LIBOR might impact the banks' borrowing costs, but its far too short term for mortgage lending.

 

[drew]

No, I wouldn’t say that the tories started with "de-regulation", as regulation as we know it only started on the back on the 1986 FS Act which introduced the type of regulator we know today (it was LAUTRO, FIMBRA, SFA etc. back then); however these were largely bodies created by the industry and were therefore self-regulating providing an obvious conflict.

As FS became more available to the public from the late eighties onwards so the FS industry grew and then familiar scandals began to unfold:

http://www.theguardian.com/business/2011/feb/07/barlow-clowes-declared-closed-compensation

http://www.investopedia.com/ask/answers/08/nick-leeson-barings-bank.asp

http://www.theguardian.com/business/2012/may/17/files-close-bcci-banking-scandal

http://www.bbc.co.uk/news/business-10725923

http://www.bbc.co.uk/news/business-20858236

All of these scandals (and more) arose under the tory watch and should have been prevented had regulators been more intrusive and independent. The tories failed to regulate the City……………..shock horror.

When Labour swept to power in 1997 they vowed to resolve the prevailing regulatory position in light of these scandals, and thus they introduced the FCA, which was directly responsible to the Treasury.

This was fine (and correct in theory) however the same politicians then interfered and pressured the body into light touch regulation (all confirmed by the Treasury Select Report) a practice that was catastrophic given the scale of the banks’ balance sheets.

http://www.theguardian.com/business/2013/mar/24/farewell-fsa-bleak-legacy-light-touch-regulator

So, surely we are entitled to ask ourselves why on earth would these politician pursue a light touch policy when they knew of the scandals that had arisen previously because of poor regulation. The collapse of Barings in the 90s was the perfect precedent of the damage that could be wreaked on the economy, yet it was merely an hors d’eovre to the collapse of RBS, BBG, BOS and Northern Rock. In short labour learnt no lessons from tory incompetence.

The tragedy for the British taxpayer was that when the trouble arose in 2008 the damage was exponentially greater having been fuelled by the housing bubble, gleefully stoked by Gordon Brown.

The banks misconduct evidently played a significant part in this collapse of the banking system, and they should be duly dealt with and wrongdoers imprisoned for years for all I care………………but then the politicians who were as deeply involved should face the same reckoning. For their part they are just as guilty.

They should certainly not be standing as the prospective PM and/or Chancellor…………………frankly it’s an insult to the electorate that they are even MPs.

Fair enough but then not's let forget that from 1992, Cameron was special advisor to the chancellor of the exchequer! Might suggest he would have insight in to the problems of light regulation which makes it surprising that during the years in opposition they weren't crying out fof the labour gov to strengthen regulation rather than weaken it!

 

[Herr Tubthumper]

Fair enough but is hard to believe that activities by a bank on a global investment market don't have some knock on effect on the retail banking sector whether that be positive or negative for the end consumer.

Quite. This is not a victimless crime.

 

[Mattywerewolf]

Do you know in which direction libor rates were manipulated higher or lower?
Doesn't make it any less of a crime but if his intention was to keep the rate lower then it's possible that you aren't the victim that you are making out.

what if it didnt cost the "hard working tax payer"? what if they even benefited? (you do understand what was going on with Libor, right?)

this describes the BoE base rate. LIBOR might impact the banks' borrowing costs, but its far too short term for mortgage lending.

A valid point if you assume that the points on the yield curve are unconnected

 

[Frampler]

Wanker (sorry banker) not named? Bank not named?
Considerably greater protection afforded than (for example) someone charged with grabbing someone's boobs.

Seems to say a great deal about the "establishment"

He's not been named at this stage because the cases of the other two bankers charged with him are still to be decided. Same goes for the bank.

However, if you really want to know, you wouldn't have to look any further than the first name mentioned in this article: http://uk.reuters.com/article/2014/02/17/uk-barclays-libor-charges-idUKBREA1G0LD20140217